OpenAI’s deal to accumulate the viral AI coding startup Windsurf for $3 billion fell aside on Friday, in accordance with The Verge.
In a stunning twist, Google DeepMind is now hiring Windsurf CEO Varun Mohan, co-founder Douglas Chen, and a few of the startup’s high researchers. A Google spokesperson confirmed the hiring of Windsurf’s leaders in a press release to TechCrunch.
“We’re excited to welcome some high AI coding expertise from Windsurf’s crew to Google DeepMind to advance our work in agentic coding,” stated Google spokesperson Chris Pappas in an e-mail to TechCrunch.
Notably, Google will not be taking a stake in Windsurf and won’t have any management over the corporate. Nonetheless, as a part of the deal, Google could have a nonexclusive license to sure Windsurf know-how, although the AI coding startup stays free to license its know-how to others.
The deal represents the AI ecosystem’s newest reverse-acquihire, by which an organization hires a startup’s high expertise and licenses its know-how however doesn’t outright purchase the corporate. Google beforehand carried out an analogous deal to rent again Character.AI CEO Noam Shazeer, as did Microsoft to rent Mustafa Suleyman. These offers have helped a number of Massive Tech firms enhance their place within the AI race with out drawing regulatory scrutiny.
“We’re excited to be becoming a member of Google DeepMind together with a few of the Windsurf crew,” stated Mohan and Chen in a press release to TechCrunch. “We’re happy with what Windsurf has constructed during the last 4 years and are excited to see it transfer ahead with their world class crew and kick-start the subsequent section.”
As of Friday, Windsurf’s head of enterprise, Jeff Wang, will take over because the startup’s interim CEO, he introduced in a put up on social media. Most of Windsurf’s 250 particular person crew will not be headed to Google DeepMind and can proceed providing its AI coding instruments for enterprise prospects.
OpenAI’s deal to accumulate Windsurf has reportedly been a significant pressure level within the ChatGPT maker’s contract renegotiations with Microsoft. Microsoft at present has entry to all of OpenAI’s mental property; nonetheless, OpenAI didn’t need its largest backer to get Windsurf’s AI coding know-how as effectively, in accordance with earlier reporting from the Wall Avenue Journal.
Earlier on Friday, Fortune reported that the exclusivity interval on OpenAI’s supply to accumulate Windsurf had expired, that means that Windsurf would now be free to discover different gives. Evidently Windsurf didn’t wait lengthy.
In current months, Windsurf has been one of many hottest AI coding startups available on the market. In April, the startup’s ARR reached about $100 million, TechCrunch beforehand reported, up from about $40 million months earlier. That speedy development attracted suitors corresponding to OpenAI and apparently Google.
The addition of Mohan, Chen, and different Windsurf leaders may considerably increase Google’s potential to construct AI coding instruments. In current months, AI mannequin suppliers have targeted extra on providing AI coding purposes to entice builders. Anthropic has boosted its income considerably on the again of its AI coding device, Claude Code, whereas OpenAI continues to pitch Codex, its AI coding agent, to software program engineers.
Windsurf, then again, is left in a way more unsure place on account of this deal. Different AI startups which have been reverse-acquihired have struggled to maintain the identical momentum they’d beforehand. Scale AI misplaced prospects on account of its take care of Meta, whereas Inflection needed to pivot fully from client AI after its take care of Microsft.
It appears possible that Windsurf may endure an analogous destiny.
